GFE versus Actual Closing Costs (insurance, loan, escrow, credit)
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Unfortunately there is no set range that the figures must match - it is an Estimate...
What I would encourage you to do is to tell/request your lender that you want to review the final HUD-1 at least 24 hours prior to closing - AND - that you will be comparing the figures from your good faith estimate to the final actual costs for accuracy.
Unfortunately there is no set range that the figures must match - it is an Estimate...
What I would encourage you to do is to tell/request your lender that you want to review the final HUD-1 at least 24 hours prior to closing - AND - that you will be comparing the figures from your good faith estimate to the final actual costs for accuracy.
I hope that helps.
What do people do if the closing costs come out to be much higher than the GFE, and are not agreable to the buyer?
If the costs come out unreasonably high, what options does a buyer have? Since it is the 11th hour ('closing' time), are there no options available for negotiation? Thanks
Don't worry about the 11th hour surprise. You can avoid that. See below.
GFE given by the lender has 2 main parts. Lender fees and 3rd party fees. Lender fee numbers will be used in the loan application documents. If not, demand the lender to match the GFE. This process is in the early stage of home purchase. Not in the 11th hour.
However, GFE estimates the 3rd party fees because lenders don't have control over these items. Your attorney should be able to provide accurate numbers for the 3rd party fees. Ask your attorney for the accurate numbers. He should have them weeks in advance.
Once you get both figures, then create a spreadsheet.
In the 11th hour (usually 24 hours before closing), your attorney can provide you with a settlement document with all the numbers. Compare them with your spreadsheet. If they differ, ask your attorney.
In my case, I had only 1 item that differed. It turned out to be in favor of me.
What do people do if the closing costs come out to be much higher than the GFE, and are not agreable to the buyer?
If the costs come out unreasonably high, what options does a buyer have? Since it is the 11th hour ('closing' time), are there no options available for negotiation? Thanks
Actually, my actual costs were significantly higher than the GFE. This was over 15 years ago, but I started to panic at the settlement table when I realized the bottom line was higher than I was told it would be, because I truly did not have the extra bucks. I know a lot of people are going to say I should never have bought a house if I was that short on cash, but as it turned out, it worked out for me. I bought the house and have never missed a payment. Anyway, the settlement officer started crossing things off the settlement sheet, and reducing other line items. I think the whole thing is a racket. She got the closing costs down to match the cash I had, and the deal went through. I am grateful that I was able to buy, as I was living paycheck to paycheck and was paying more in rent than I ended up paying for the house payment. I would never have been able to accumulate any wealth had I not been able to buy my house. Not everyone who is short of cash is a bad credit risk. A lot of people just need a little help, and don't have family to "gift" the upfront costs.
Don't worry about the 11th hour surprise. You can avoid that. See below.
GFE given by the lender has 2 main parts. Lender fees and 3rd party fees. Lender fee numbers will be used in the loan application documents. If not, demand the lender to match the GFE. This process is in the early stage of home purchase. Not in the 11th hour.
However, GFE estimates the 3rd party fees because lenders don't have control over these items. Your attorney should be able to provide accurate numbers for the 3rd party fees. Ask your attorney for the accurate numbers. He should have them weeks in advance.
Once you get both figures, then create a spreadsheet.
In the 11th hour (usually 24 hours before closing), your attorney can provide you with a settlement document with all the numbers. Compare them with your spreadsheet. If they differ, ask your attorney.
In my case, I had only 1 item that differed. It turned out to be in favor of me.
Great, thank you. Another excellent poster on this board did mention the settlement document in another thread. I will definitely ask for that in advance and read through it.
You will pay escrows, taxes, insurance, prepaid interest, recording fees, etc no matter what lender you go with.
This is why you should pay attention to what the lender charges, and to make sure the attorney isn't charging a lot more than everyone else.
If the lender still has the same fees/rate, then you don't have much to worry about
Ok. Looking at the GFE right now, the only charges are a .5% origination fee, an appraisal fee of $350, a flood determination fee of $12, and an application fee of $250. I didnt realize there was a fee to apply for a loan but I guess there is work involved in that process so it seems appropriate. Do these 800-899 items seem 'good' or appropriate to you all?
Ok. Looking at the GFE right now, the only charges are a .5% origination fee, an appraisal fee of $350, a flood determination fee of $12, and an application fee of $250. I didnt realize there was a fee to apply for a loan but I guess there is work involved in that process so it seems appropriate. Do these 800-899 items seem 'good' or appropriate to you all?
Shop around. I'm concerned about 0.5% origination fee. If you borrow $200k, this fee alone will be $1000.
When I found a better GFE, my lender matched it.
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